17 Oct 2007  Research & Ideas

Why Global Brands Work

Japanese automakers create single products and brands for worldwide consumption, while Ford customizes products for local markets. You know who won. Why do global brands work? What makes them work? Professor John Quelch provides some answers. Key concepts include:

  • For decades, Ford has created specialized products for different countries while Toyota, Nissan, and Honda sold standard products under a single brand umbrella.
  • Ford's strategy resulted in added manufacturing and supply chain costs, a balkanized bureaucracy, and deteriorating market share, financial performance, and stock price.
  • There are 5 characteristics that all top global brands have in common.

 

Editor's Note— Harvard Business School professor John Quelch writes a blog on marketing issues, called Marketing Know: How, for Harvard Business Online. It is reprinted on HBS Working Knowledge.

Ford has finally woken up to what Toyota knew a long time ago: the power of a single global brand.

Over 20 years ago, Harvard professor Theodore Levitt praised Japanese manufacturers for their focus on "what every consumer in the world is seeking: world-class modernity at affordable prices." Either because they didn't understand regional differences in consumer preferences or out of self-confidence, Toyota, Nissan, and Honda sold standard products under a single brand umbrella.

For decades, Ford adapted its manufacturing platforms, features, and model names from one country to another. The results: added manufacturing and supply chain costs that strained consumers' willingness to pay; a balkanized bureaucracy in which regional managers exaggerate the need for local adaptations to defend their turf; and a deteriorating market share, financial performance, and stock price.

Fords worldwide should have a common look, feel, and brand essence.

Ford was once one of the 10 most valuable brands in the world. They're no longer on that list, but Toyota now is. How did Toyota—and the other nine companies—do it? There are 5 characteristics that all top global brands have in common:

1. The same positioning worldwide. This provides a combination of functional product quality and innovation with emotional appeal. Think Coca-Cola and Disney.

2. A focus on a single product category. Think Nokia and Intel.

3. The company name is the brand name. All marketing dollars are concentrated on that one brand. Think GE and IBM.

4. Access to the global village. Consuming the brand equals membership in a global club. Think IBM's "solutions for a small planet."

5. Social responsibility. Consumers expect global brands to lead on corporate social responsibility, leveraging their technology to solve the world's problems. Think Nestlé and clean water.

Ford has a proud history. Its name recognition is strong worldwide. The chairman is committed to the environment. Many consumers are no longer considering Fords when buying their new cars, but they are predisposed to giving Ford another chance. Fords worldwide should henceforth have a common look, feel, and brand essence. Low volume management distractions including Jaguar, Land Rover, and Volvo will be sold off; they're now meaningless. U.S.-based models like Mercury will be discontinued.

Can Ford recover? The answer lies in whether the common vehicle platforms developed for the new strategy prove to be truly global in design or merely more of the same Detroit-centric product that have caused Ford's market shares around the world to erode.

What do you think? Can Ford rehabilitate its global brand status?

Join the discussion on Harvard Business Online.

About the author

John Quelch is Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School.